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Take charge of your app monetization with these six 2016 app monetization trends

As app developers, both established and budding, you need something to keep your app business growing. Creating more apps? Yes, that sits right on top, but then once you have created them, how do they sustain themselves, and how do they help you sustain your app business? The straight answer is you get your apps to make you money. In other words, you need monetize your app.

A lot has been happening in the app monetization space though. These global app monetization trends should help throw some light on everything that you need to know from an app monetization perspective.

Paid app downloads on the decline

According to Gartner, the revenue for paid app download has been steadily declining globally, with the share of revenue declining from 69.5% in 2014 to 59.5% in 2015. It is estimated to further decline to 37.8% in 2017.

In-app purchases continue to hold fort

In-app purchases (IAP) have seen considerable acceptance by consumers. The global in-app purchase share of revenue which was at an estimated 22.5% in 2014 is said to have risen to 30.9% in 2015. It is projected to hit 48% by 2017. In India specifically, where credit card users are only about 22 million, app developers are driving IAP by integrating payment mechanisms such as carrier billing. On the other hand, Apple and Google have reduced the minimum payment value in their app stores to INR 10 (around 15 cents) to make it IAP affordable for the country’s smartphone users.

Freemium catches on

The freemium model of monetization is also gaining traction among smartphone users where they download apps for free but can access certain premium features for a fee. According to a study by IDC & AppAnnie, freemium as a monetization model has grown at a rate of 72% between 2013 and 2014.

In-app advertising is the one to look out for

While in-app purchases find takers, in-app advertising is steadily growing. According to a December 2015 Vision mobile commerce of things report, advertising is the most popular revenue model among mobile app developers with almost 31% of surveyed developers using it. Revenue from in-app advertising was estimated to grow from USD 2.8 billion in 2014 to USD 4.3 billion in 2015 a growth of 55% year-on-year. This revenue figure is estimated to go up to USD 10.6 billion by 2017.

For greater user engagement look towards rewarded ads

Rewarded ads are increasingly becoming the preferred approach for app developers to engage their users with ads. In fact, studies have shown rewards can renew app usage among abandoned users. Of those who stop using apps, 30% would use an app again if offered some reward. While rewarded ads are becoming popular among app developers because they help increase engagement, they are also enabling app developers achieve that much needed initial download thrust for their new apps and improve app store ranking. Among all the ad formats, rewarded videos are catching on fast as one of the most popular ad formats among game publishers.

A seamless app usage experience with native ads

Native ads are making a splash on the mobile advertising scene, as they blend in seamlessly with the app content, while delivering the advertiser’s message in a contextual manner. Not only are native ad formats engaging with four times higher CTR than traditional banner ads but they are also found to generate better eCPMs for publishers.

The above trends clearly point to the fact that while in-app purchases might be popular among app developers, more of them will choose in-app advertising in the coming days. If you are an app developer looking to make the most out of your app business, these trends will definitely help you decide how your apps make you money.